Zhong v Shield Resources Pty Ltd (No 2)

On 31 May 2021, I delivered a judgment in this matter and made an order, inter alia, that $100,000 of the $735,200.62 paid into court by the second defendant, Ms Ying (Emma) Guan, be released to her: Zhong v Shield Resources Pty Ltd [2021] NSWSC 617. Upon making those orders, counsel for the plaintiff, Mr Burchett, sought a stay of them for seven days in order to consider an interlocutory appeal to the Court of Appeal against my decision. I heard from the parties and ultimately stayed that order until 5.00pm on Thursday, 3 June 2021.

At 4.59pm on Thursday, 3 June 2021, the plaintiff's solicitor electronically filed a Notice of Motion seeking that the orders I made on 31 May 2021 be set aside. An unfiled copy of that Notice of Motion was e-mailed to my chambers at 5.23pm that day. The plaintiff seeks that the order that $100,000 be released to Ms Guan be set aside pursuant to r 36.16(3A) and/or r 36.17 of the Uniform Civil Procedure Rules 2005 NSW (“UCPR”). Those rules provide as follows:

The affidavit in support of the motion by Ms Mingjing Ni affirmed on 3 June 2021 identifies the relevant error to be found at [52] of my judgment where I observed the following:

It was submitted that this summary of the plaintiff’s submission was incorrect and that the transcript of 31 May 2021 reflected that Mr Burchett in fact submitted the following:

It was further noted by Ms Ni that it was counsel for the defendants who submitted that the claim would be no more than $1.55 million. The plaintiff thus contends that he did not submit that he would be entitled to $1.5 million but rather that he would be entitled to $2 million either way based on the sum of $1.5 million plus interest and costs. On this basis, it was submitted that the case advanced by the plaintiff on the second defendant's Notice of Motion heard on 31 May 2021 has not been determined. Ms Ni further noted in her affidavit that she has instructions to appeal the decision of 31 May 2021 if the orders I made on that day are not set aside by me today.

In addition to making this complaint, Ms Ni in her affidavit repeats submissions made at the hearing on 31 May 2021 to the effect that there was no evidence of the second defendant's need to use the money for legal or other expenses and again raised doubts about the amount of the second defendant's equity in the restrained property in St Ives.

I have considered those submissions in chambers and determined that I did not need to hear from the second defendant in relation to them. The effect of UCPR rr 36.16(3A) and 36.17 is that I am able, within 14 days of a judgment being entered, to correct any mistake or error in it. As I have already indicated, the mistake or error identified is said to be at [52] of the judgment. At that paragraph, I described the amount of $1.5 million being a figure submitted by Mr Burchett when in fact it represents what I was satisfied of on the evidence before me.

I am not satisfied that I failed to determine any aspect of the plaintiff's claim. As the relevant portion of Mr Burchett's submission before me on Monday makes clear, at no time was any estimate of the plaintiff's costs in these proceedings ever provided to the Court. It was simply noted that the defendant's application for security for costs in the amount of $350,000 was not accepted by the Court and the plaintiff was instead ordered to pay $50,000 into court. I noted that submission of the plaintiff at [50] of my judgment.

I was not satisfied that the plaintiff's claim for interest and costs on the loan of $2 million had been established.

The evidence before me was that cl 3 of the loan agreement provided that the borrower will pay the lender simple interest on the principal sum at a rate of 12 percent per annum calculated daily and payable monthly until the principal is repaid in full. It was common ground that the sum of $1.15 million plus interest would come to at least $1.5 million, as the applicant on the motion conceded this in the hearing before me on 31 May 2021.

Clause 10 of the loan agreement provides:

The effect of the plaintiff's submission was that the costs he would be entitled to under this clause would amount to at least $500,000. There was no evidence before me as to how that estimate could be arrived at. As I have already stated, it was on the basis of what was common ground rather than what was submitted by Mr Burchett that I observed what I did at [52]. The amount of $1.5 million was what the plaintiff claimed under his alternate ground, less the costs of which there was no evidence before me.

To the extent that the real complaint made by the plaintiff is one of adequacy of reasons, I note that what is apparent from my reasons is that I did not accept that the plaintiff had established that his costs and interest would amount to nearly $1 million. I reached that decision based on the evidence before me and by reference to the amount of security for costs paid into court by the plaintiff. All other matters raised are a repeat of matters I have already considered.

Accordingly, I make the order that the notice of motion filed on 3 June 2021 be returnable before me on 4 June 2021 and the time for service be abridged. I otherwise dismiss the notice of motion.

After I made those orders today, I indicated to Mr Burchett that I was prepared to stay the orders I made on 31 May 2021 until 5pm on Monday 7 June 2021 in order to afford him the opportunity to file the anticipated application for leave to appeal against my decision on Monday. Mr Burchett submitted that that was insufficient time for him to prepare the matter for the Court of Appeal and instead sought that the stay be extended until Wednesday 9 June 2021.

In response to that, Mr Finch, appearing for both defendants in this matter, submitted that there was no proper basis to extend the stay. It was submitted that what has occurred this week has been a back-door approach to an appeal that was foreshadowed in the hearing on Monday 31 May 2021.

As to Mr Burchett's claim that there is no urgency of the money being released to Ms Guan, it was noted that there is a “chicken and egg” quality to the issue of urgency. The further the delay caused by an application for leave to appeal against my decision, the greater the prejudice.

It was submitted that if the stay was extended until Wednesday, that would have given the plaintiff one and a half weeks from the time he foreshadowed the prospect of an appeal to the filing the relevant court documents. It would also be three weeks from the time that the second defendant first filed the motion seeking access to some of her funds.

It was further submitted that no real prejudice to the plaintiff has been established should such a stay not be granted. In response, Mr Burchett submitted that there is a real issue to be tried in the Court of Appeal, that issue being the relevance or otherwise of the fact that the funds paid into court are subject to an equitable charge given that they are the proceeds of the property described in the loan agreement whereas the restraining order is, in effect, an asset preservation order.

It was submitted that the difference between the legal status of those two amounts is a matter relevant to whether any of the funds should be ordered to be paid out at all. In those circumstances, it was submitted that it will take more time than simply until Monday to prepare and file the relevant documents.

I have had regard to both of those submissions. It is to be accepted that my judgment was made available to the parties on Tuesday 1 June 2021 and that the transcript was available the same day. The plaintiff has had since then to consider the issues that he foreshadowed on Monday 31 May 2021.

Having said that, I was not able to hear this notice of motion until 4pm today and there would be insufficient time to file any documents today. Having regard to that factor and that there is some complexity to the question raised, I am prepared to extend the stay until close of business on Tuesday 8 June 2021 and I make that order as well.

I also make an order that the plaintiff pay the defendant's costs of today's motion on the ordinary basis.